Sponsors (7)
The bill increases the after‑tax value of water, stormwater, and wastewater subsidies—encouraging household conservation and giving clearer definitions—at the cost of reduced federal revenue, possible unequal benefit distribution favoring wealthier homeowners, and some remaining compliance/audit risk.
Homeowners and renters who receive qualifying water, stormwater, or wastewater subsidies can exclude those payments from taxable income (including amounts received after 12/31/2021), increasing recipients' net after‑tax benefit.
Homeowners and renters are more likely to install water‑efficiency and stormwater management measures because excluding subsidies lowers the after‑cost of these improvements, encouraging household water conservation.
Taxpayers and state/local governments get clearer guidance because the bill defines key terms (water, stormwater, wastewater, providers), reducing compliance uncertainty about which payments qualify.
All taxpayers could face higher federal deficits or reduced federal spending elsewhere because expanding the exclusion lowers federal tax revenue.
Low‑income households may get less of the tax benefit than wealthier homeowners if utilities or local governments target subsidies unevenly, reducing the equity of the program.
Taxpayers who receive subsidies may still face disputes with the IRS over whether particular measures meet the statutory definitions, creating audit risk and additional compliance costs.
Based on analysis of 2 sections of legislative text.
Makes certain water, stormwater, and wastewater subsidies for a taxpayer's principal residence nontaxable by excluding them from gross income.
Introduced March 5, 2025 by John R. Curtis · Last progress March 5, 2025
Expands the tax exclusion for conservation subsidies so certain water, stormwater, and wastewater rebates and payments for a taxpayer's principal residence do not count as taxable income. It adds definitions for covered measures and providers and applies to amounts received after December 31, 2021.